NZDUSD is in a steady decline this year, following along with the broad USD bull trend and particularly the underperformance of risk-sensitive currencies. The fragile risk environment, falling stock markets and a hawkish Fed are all negative factors for the NZ Kiwi dollar. With those remaining in place for at least the next few months, the downtrend in NZDUSD looks set for an extension lower.

To determine entry and target levels, we can look at the technical situation. It also points to a continuation of the bear trend, and we can see from the charts that current levels around 0.5650 may be a good entry point. This is close to the falling resistance trendline of the down channel that started with the swing high on August 12 around 0.6470. 

This resistance is now located at the 0.57 zone and can stretch as high as 0.5750. This area can provide attractive bearish setups, so looking to establish short positions here can be a viable strategy. The stop loss can be clearly set above the resistance and above the falling trendline.

Assuming the bear channel holds intact, NZDUSD can extend lower and drop below the March 2020 lows of 0.5468 that were established during the outbreak of the Covid pandemic. A projection of a fresh bear leg within the channel shows that the 0.5250 area can be reached within the pace of this trend (see chart).

Entry:

• Look to enter short on bearish signals in the 0.57 - 0.5750 area;

Stop loss:

• NZDUSD should not break much above 0.58 if this trade is going to work well;
• So, the stop can be placed above the 0.58 zone

Targets:

• 1st: 0.55 zone
• 2nd: 0.53 zone